What could a family buy in London on the average salary?

It has become virtually impossible to find a family home to buy in London on an average salary, new research reveals.

House prices in the capital remain far out of reach for a family with a single average earner, despite the market being cooled by more people seeking to move out of the capital during the pandemic.

The median London salary at £39,719 is higher than the overall UK median salary at £31,285, according to the ONS, but for someone borrowing a mortgage of 4.5 times their earnings and buying with a 10 per cent deposit, this only stretches to a property costing around £200,000.

To highlight how difficult it would be for a single average earner family to buy a home, we looked at potential three-bedroom properties in London and found just five for sale on Zoopla costing £200,000 or less. And for many buyers, even this handful may not be suitable.

All five listings have a feature that marks them out from the traditional definition of a home.

The majority are shared ownership, which means that you can only buy a proportion of the property – and that means their actual outright cost would be more than £200,000.

And finally, one of the three-bedroom properties in our list is not even on dry land, as it is a houseboat. 

Daniel Copley, of Zoopla, said: ‘Family homes in London on sale for under £200,000 are few and far between.’ 

In fact, the average price of a home in London is £507,230, up 4.2 per cent or £20,668 in a year, according to Nationwide. 

This is beyond even a London household with two median full-time salaries totalling £79,438, on which a 4.5 times earnings mortgage would stretch to £357,471. Added to a 10 per cent deposit – which is £50,700, based on the average London house price – that equates to just over £408,000.

The average London price compares to typical values standing at £253,113 for the whole of the UK, which is up 10.1 per cent or £23,294 in a year. 

North London estate agent Jeremy Leaf said: ‘Last year, average property prices outstripped average earnings and stayed there, which made it even more difficult to buy houses or flats with outside space as these were top of the wish list for those looking to move.

‘For first-time buyers, it was even more difficult to take that initial step onto the ladder without help from the Bank of Mum and Dad. The net result is evidenced in the Zoopla figures showing virtually no houses available in many parts of London, following multiple offers on anything reasonably decent at a fair price.

‘But all is not necessarily lost as the number of market appraisals is on the rise, as is often the case at this time of year. Providing owners can go back to work and children return to school, many of those should become listings and improve the balance between supply and demand, as well as help keep property prices in check.’

The five London homes for sale for less than £200k…

1. Three-bed house, South East London, £150k

This image has been computer generated, as this development of flats and townhouses in South East London’s Thamesmead has yet to be finished

The three-bedroom houses are available to buy under shared ownership, and allow buyers to purchase between 30 per cent and 75 per cent of the property

This three-bedroom house in South East London’s Thamesmead is for sale for £150,000.

It is part of a new development that has yet to be completed. The properties are shared ownership and allow buyers to purchase between 30 per cent and 75 per cent of the property.Buyers pay rent on the remaining unpurchased share.

As well as three bedrooms, the property has private parking and good access to public transport. It is half a mile from Abbey Wood train station, where Crossrail is scheduled to open this year, making Canary Wharf only 11 minutes away. It is available via Peabody.

2. Three-bed house, West London, £125k

This three-bedroom house in West London’s Hayes has a full market value of £500,000, with a 25 per cent share being sold for £125,000

Rent is payable on the remaining share of £943.10 a month, and there is also a monthly service charge of £17.02

This three-bedroom house in West London’s Hayes has a full market value of £500,000.

A 25 per cent share of £125,000 is available to buy, with rent payable on the remaining share of £943.10 a month. There is also a monthly service charge of £17.02.

It is available via Catalyst and the listing states that ‘priority will be given to those who live or work in the Hillingdon local authority area’. 

3. Three-bed house, South East London, (price on application)

These three-bedroom townhouses in South East London’s Sydenham have not yet been completed, but are expected by so within the coming months

These properties are shared ownership, meaning you will only be able to buy a share, with rent payable on the remaining amount

These three-bedroom townhouses in South East London’s leafy Sydenham have not yet been completed, but are expected by so within the coming months.

Their prices have also not been revealed and are only available on enquiry from serious buyers. However, they were included in our search on Zoopla for three-bed homes in London costing less than £200,000.

That price, however, is not the full market value as these properties are shared ownership, meaning you will only be able to buy a share, with rent payable on the remaining amount. The houses are available via Peabody.

4. Three-bed house, West London, £103,200

This three-bedroom house in West London’s Feltham has a full market value of £344,000, with a 30 per cent share available to buy for £103,200

This three-bedroom house in West London’s Feltham has a full market value of £344,000.

A 30 per cent share of £103,200 is available to buy, with rent of £405.67 payable on the remaining share. There is also a monthly service charge of £12.12.

The listing states that the property is being sold on a leasehold basis and is available via Catalyst.

 5. Three-bed houseboat, West London, £180,000

This home is a houseboat with a guide price of £180,000, but it is being sold at auction where properties tend to sell for more

The houseboat has three-bedrooms and is moored at Brentford Dock with full mooring rights

This three-bedroom property is a houseboat is for sale with a guide price of £180,000.

However, it is being sold at auction where properties tend to sell for higher than the initial guide price.

The boat is situation in Brentford Dock and has full mooring rights. The mooring rights licence is up to 2039 at £468 a month, covering water rates and site maintenance. The property is being sold by Auction House London.

The mooring would therefore add £5,616 per year in costs.